Targeted support, but a mixed picture for real estate – Autumn Budget 2026

Budget 2026 contains targeted support for social and affordable housing, regeneration, qualifying brownfield development and strategic data-centre projects.

Its impact across real estate is nevertheless mixed: landlords and personally held property businesses face materially higher property-income tax rates, historic capital-allowance pools receive slower relief, and several property-related tax and compliance changes temper the benefits for investors.

Key announcements include an additional £1.5bn of funding for affordable and social housing, £4.7 billion for the new Your First Home scheme, and further support for regeneration through new Good Growth Funds. Reforms to the Biodiversity Net Gain (BNG) regime should also further reduce compliance burdens for smaller developments and brownfield sites.

From a tax perspective, the most notable measure is the increase of the first-year capital allowances for qualifying main pool expenditure from 40% to 50% from January 2027 but simultaneously a reduction in the main pool writing down allowance from 14% to 12% from April 2027. Therefore, businesses should model the impact of any changes, particularly in light of upfront tax relief on proposed major expenditure or the adverse effect of the reduced writing down allowance on existing pools.

There is also a tightening of the stamp duty land tax (SDLT) de-grouping rules to close a technical loophole affecting intra-group property transfers on a winding up and confirmation that annual tax on enveloped dwellings (ATED) charges will increase by 3.5% in line with CPI from April 2027.

The government also intends to introduce a new VAT zero rate from April 2027 for land sold to registered providers of social housing. This should enable housing associations to acquire land before the ‘golden brick’ stage, allowing earlier title transfer and reducing reliance on staged transactions and complex contractual arrangements. For landowners and developers, the change should simplify qualifying disposals and help reduce VAT-driven financing, timing and cash-flow barriers, although the detailed operation will follow.

The Budget also introduces a new package of founder-focused incentives, including a new Founders’ Relief, applying a 10% CGT rate to up to £10m of lifetime qualifying gains. The relief is unlikely to apply to property investors, property developers or housebuilders because property development and dealing in land are excluded activities. However, construction or infrastructure businesses may qualify assuming the other qualifying conditions of the relief are met. Separately, the Business Asset Disposal Relief lifetime limit has been reduced from £1m to £500,000 from April 2027, directly impacting those with businesses in the sector looking to exit.

Not all measures are favourable. From 6 April 2027, property income tax rates will increase by a further 2 percentage points in addition to the increases announced in Budget 2025 to 24%, 44% and 49%. This will increase the tax burden on landlords and personally held property investments, although corporation tax rates remain unchanged.

The Budget also signals continued support for digital infrastructure through the new British Data Centre Covenant, reinforcing opportunities for data centre developers, investors and landowners.

Recommended actions:

• Review development projects in light of new housing and regeneration funding.
• Review qualifying plant and machinery expenditure, the available claim route and timing, and the effect of the reduced writing-down allowance on existing pools.
• Review planned group restructurings and property disposals for SDLT implications.
• Assess the impact of higher property income tax rates on individual investors and ownership structures.
• Monitor opportunities in the growing data centre sector.

For more information and further guidance on VAT, the Autumn Budget announcements and succession planning, please contact us today and speak to a member of our team. You can also explore all of our Autumn Budget insights, including our detailed Budget report, offering more information on everything announced.